The housing crisis is an immigration crisis

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Every week, The Guardian Australia publishes an article hand-wringing about the nation’s housing crisis and its harmful impact on younger and poorer Australians.

The guardian housing

“Over the past months and years, we’ve watched in alarm as houses have grown chronically unaffordable. Guardian Australia wanted to get a sense of how deeply the housing crisis is reshaping the way people live, so we asked readers to tell us, and you did”.

“Almost every one of the 160 respondents described their despair and desperation as, at best, they tread water and, at worst, live in their cars”.

“Adult children are moving in with their parents, older people are living in shared houses, big families are renting small apartments and commutes are getting longer. Many people cannot afford to have children and are working long hours to pay – sometimes up to 75% of their income – for the a roof over their head”.

The Guardian’s concerns are justified. Relative to income, purchasing or renting a home in Australia has never been more expensive.

However, the Guardian never holds the federal government to account for engineering the largest immigration boom in the nation’s history into a supply-constrained market.

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NOM

This has delivered a record divergence between housing demand and supply.

Housing supply and demand
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The same has happened in Canada, which has experienced a record immigration-driven population boom with no commensurate increase in housing supply.

Canadian housing demand and supply

Like in Australia, this population surge has driven a record decline in rental affordability.

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Canadian rents

Hilariously, the cognitive dissonance about the impact of immigration on housing is also alive and well in the UK. In the Sky News interview below, Housing Secretary Angela Rayner flatly refused to acknowledge that the 2.5 million immigrants Labour claims will arrive in the UK will fill the government’s plan to build 1.5 million homes.

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Let’s be honest for a moment. Given that Australia’s birth rate is below replacement, all of the nation’s population growth comes from net overseas migration.

Australian population projections

This means that the housing shortage in Australia has been 100% caused by excessive levels of immigration.

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It also means that Australia’s housing crisis is really an excessive immigration crisis.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.